Ryanair scraps loyalty program after losing nearly 2 million euros in eight months, existing members to get benefits

Just eight month into launching a loyalty program for its customers, US budget carrier Ryanair Holdings Plc has closed its frequent flyer program, citing more costs than expected.

In a statement on Friday, Ryanair said that more than 55,000 customers signed for the loyalty subscription called Prime, which generated the company more than 4.4 million euros ($5.1 million) in fees. However, members received benefits worth as much as 6 million euros in eight months, thanks to discounted fares.

“This trial has cost more money than it generates. This level of membership, or subscription revenue, does not justify the time and effort it takes to launch monthly exclusive Prime seat sales for our 55,000 Prime members,” Chief Marketing Officer Dara Brady said.

The airline said that it wants to provide discounts to “all our customers, and not this subset of 55,000 Prime members”.

Chief Executive Officer Michael O’Leary said earlier this year that he had been persuaded to start Prime after previously being a “great skeptic,” and that he expected it to generate 2.5 million euros from the membership fees.

“I think the only mistake we made is we underpriced the Prime membership,” he said in May on an analyst call. “We should probably have charged about 99 euros for it.”

Rival airline Wizz Air Holdings Plc also has a 499 euro membership called All You Can Fly, for which the airline recently released more subscriptions.

Existing members of Prime will be able to access the remainder of their annual Prime subscription, but no new members will be accepted after Friday, Ryanair said.

“We are grateful to our 55,000 Prime members who signed up to this Prime trial over the last eight months, and they can rest assured that they will continue to enjoy exclusive flight and seat savings for the remainder of their 12-month membership,” it said.

The airline, Europe's largest by passenger numbers, said earlier this month it expected to fly 207 million passengers in the year to end-March, one million more than earlier forecast, after improved deliveries of aircraft from Boeing enabled it to add capacity in the first half and the current quarter.

What is Ryanair Prime?

Ryanair Prime, priced at 79 euros a year, offered members cheaper flights, travel insurance and free reserved seats on as many as 12 journeys, and the foray marked something of a departure from Ryanair’s no-frills, minimal-service model.

When the airline introduced the plan, it said Ryanair Prime was limited to 250,000 members on a first come/first served basis, suggesting sign-ups remained far behind its ambitions.

(With Bloomberg inputs)